Question

Cape Town – In a new push to revive the local textile industry hard hit by cheap Chinese imports in the late 1990s, Sactwu will this week host the 2016 Clothing, Textile and Leather (CTFL) Imbizo.

The SA clothing and textile workers' union said despite significant investment and government support in recent years, the industry is struggling to move from survivalist to expansionist mode. The Imbizo, which will be held at the Cape Town International Convention Centre (CTICC) on Tuesday, will bring together leading industry thinkers to consider and plan how they can maximise and grow the industry's export footprint. Sactwu researcher Simon Eppel told Fin24 that while CTFL jobs dwindled from about 210 000 formal sector jobs in the 2000s to 90 000 currently, it is still one of the largest sectors in manufacturing. "Government needs to answer issues of incentives, cheaper industrial loans, and steps to deal with customs fraud, including reference prices and increased monitoring, designation for (government) procurement of CTFL goods, etc," said Eppel. The Imbizo discussion will include case studies from successful exporters (both inside the industry and in the broader economy), inputs from government export agencies, market information from researchers and export tips from potential customers. It will also examine how to overcome challenges to exporting and the support measures that exist to do so. "The problem in South Africa is if you don't fix the supply chain and you don't have incentives to do exports, we will never be competitive enough to do it. "If we want to be competitive the government needs to firstly lift the duty on imported fabric and logistically find a solution to get garments to the international market faster, such as preferential rates on air cargo," Pillay said. Eppel said the Imbizo is not a jobs programme, but merely a platform for companies to facilitate a dialogue about the export industry. "We hope that it will end up in some companies starting to export and so create jobs and build local industry", said Eppel.
Questions:
Question 1a) As a leading business economist in the country, you were requested to present a detailed research report during a panel discussion at the textile industry Imbizo suggested in the article on how anti-competitive industry practices presents themselves in the sector. Present your report in assignment format. In your report, apply your knowledge of market structures and trade to discuss some of the industry practices and how they could be restricting growth of the textile sector. [15 marks]
Question 1b) The reporter highlighted some possible interventions to revive the textile sector without going into the details. As a business economist, write a detailed and balanced critique of the suggested interventions and how these can either fail or succeed to address the challenges facing the textile sector in South Africa. Your arguments and interventions must be supported by relevant theories and diagrams derived from a specific market structure. [25 marks]
Question 1c) Using some insights and examples from the textile industry, other sectors and products in any economy, comment on the realism of the assumptions of the theoretical model of perfect competition. [20

Answer 1